'Buy' Sumitomo Chemical Shares Maintains Nirmal Bang Post Q1 Results — Check Target Price

Sumitomo's consolidated revenue at Rs 10.57 billion was a slight beat vs brokerage estimates and beat Bloomberg (street) estimate by 10.1%. Gross margin at 38.1% was a 193 bps miss vs our estimate while Ebitda margin at 20.7% was a 110 bps miss.

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Nirmal Bang Report

We maintain Buy after raising target price by 19.7% to Rs 756 based on the nil/6.1% hike in FY26E/FY27E, after increasing the P/E from 36.5 to 41.0x, which is at a 5.4% discount to the five-year median P/E.

We raised FY27E by 6.1% based on the improving fundamentals for Sumitomo Chemical India Ltd.’s business/topline growth, especially in India.

Our new P/E is justified based on the potential for margin expansion driven by the focus on higher-margin products, including new ones in proprietary and off-patent products along with herbicides/PGRs and bio products, which are likely to sustain ROCE.

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